IKEA to pay American employees actual living wages starting in 2015

The blue- and yellow-clad home furnishings behemoth plans to add 17 percent more green to the paychecks of employees who earn minimum wage.

IKEA will look at cost of living by city to determine how much to boost pay. (Photo: jebb/Flickr)

IKEA, the meatball-pushing home furnishings retailer from Sweden that seems to delight in sending its most slavishly devoted shoppers off on emotional roller coaster rides time and time again, is kicking off summer on a positive, typically attention-grabbing note: minimum wage “co-workers” (read: employees) at 33 of IKEA's American retail outposts will see a bump in their hourly compensation early next year as the company institutes a new, potentially game-changing minimum wage policy that’s based on the cost of living in a particular city or region.

Although the new base salaries for minimum wage-earning IKEA employees won’t be the same across the board, employees will enjoy increases by 17 percent to an average of $10.76 per hour in 2015 — that’s $3.51 higher than the criminally low federal minimum wage of $7.25, a rate that has remained unchanged since 2009. IKEA's current average minimum wage is $9.17 per hour.

Always the trendsetter, IKEA is the first major American retailer to put Amy Glasmeier’s MIT Living Wage Calculator into real world use. As mentioned, the calculator establishes salaries based on the actual cost of living (housing, food, transportation, etc.) in a specific area (the calculator is broken down by county) and not on what competitors are paying their employees. For example, while IKEA co-workers employed at the retailer’s Red Hook, Brooklyn location might be making close to $13 an hour starting in 2015, their colleagues in the Kansas City ‘burbs will receive a bump to $9.36.

As reported by the Washington Post, the change will impact roughly half of IKEA’s 13,650 person-strong American workforce employed at 38 retail locations, five distribution centers, two service centers, and Virginia manufacturing facility. The raises also apply to workers to be hired at three new IKEA stores to open by the end of 2015. The 50 percent of workers who will not be affected by the change are non-minimum wage employees — those employed at non-retail facilities and at five individual stores — who already receive a living wage or higher.

It’s unclear whether or not IKEA plans to tweak wages each time that the Living Wage Calculator’s data is updated. And no, IKEA’s progressivism won’t negatively impact customers: the price of that MDF end table or energy-saving LED bulb won’t be hiked to help IKEA raise its starting hourly wage for co-workers. Hiring will also not be reduced.

For a retailer that’s positively obsessed with environmental sustainability, the move is one geared to help low-wage workers enjoy financial sustainability and make IKEA a more attractive place to work while also stamping out high turnover rates. Rob Olson, chief financial officer and acting president for IKEA US, tells the Huffington Post: "It's all centered around the Ikea vision, which is to create a better everyday life for the many people. The many people is, of course, our customers and consumers, but it's also our co-workers.” He adds: “We're not advocating for a federal or state movement. We're more focused on our co-workers and doing the right thing for them."